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What's Wrong With Being a Turkey?
One of our dear friends comes to us to seek advice, since we seem to know a thing or two about money. Our friend just so happens to be a turkey - a particularly great turkey, thank you very much, so don't judge.
Our dear turkey friend is being told by all their friends that there is this incredibly friendly butcher they ...
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Your father was giving your mother money intended to be spent on your food, clothing, textbooks, and so forth. Your mother no longer has these expenses. The only expense that remains for her is rent (or property tax), considering there is probably now an empty, redundant bedroom in her home. The extent to which your mother was also expected to contribute to ...
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It's a little unusual, but I don't think the financial terms are completely unreasonable on their face.
What you describe is similar to an interest-only loan, where you make payments that only cover the interest due each month, and the entire principal is due as a single "balloon payment" on a specified date (in this case, the date on which the condo is ...
80
Everything on Earth can go wrong. Including, god forbids, your MIL being hit by a bus the next day and your ex inheriting all of her belongings and none of her promises to you.
This is a bad idea.
What I would suggest doing would be for your MIL to buy your ex a cheap and simple clunker to move herself around without you being ever involved.
If you still ...
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Loaning money to close relations tends to end poorly. You are better off not loaning your older child money. This solves all your issues except for one.
You mention that your cash savings are earning "almost nothing". Is this an emergency fund, or money that can be invested? If it is an emergency fund, you have yet another argument against paying off ...
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I have no problem with you helping your mother but only under the following circumstances:
You have enough room in your budget to help out. You should not go into debt or sacrifice your necessities to support your mother.
Your dad is not legally obligated to help. If he is, she should pursue that first.
She needs the help. Is this money from your dad that ...
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David Schwartz's answer is great, I just wanted to add that since you have credit card debt, that $1,500 in rent could cost you a lot more due to interest. Average credit card interest rate is ~16%, that's $20/month in interest on $1,500 and more each month as it compounds.
If you are carrying a balance from month to month on a credit card I suggest you do ...
58
I think it's less about proving that it's a Ponzi scheme and more about thinking which argument will resonate best with her.
Everyone responds to different types of arguments.
For someone who is a logical thinker, you could break down the logic and explain how ridiculous the returns are. With such ridiculous returns, you would have to wonder why someone ...
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"Mom, that sort of thing is court-ordered."
Tell her that she will need to go back to court to have the divorce settlement modified. You will be happy to comply with any court order, of course.
The money in question is child support. It reflects that the cost of living with a child is higher than living alone. Obviously, if you move out, that has a big ...
answered Sep 25 at 22:19
Harper - Reinstate Monica
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There is no right or wrong answer to this question. It's really about how much you are willing to, are expected to, or should help your family. You could certainly gift the $1,500 to your family and you could also rightfully insist on an immediate full reimbursement from pooled funds.
I'd suggest you try to have honest conversations with the rest of your ...
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I think there's value in charging family members/friends interest if it will make them take the loan seriously. The problem is that if you're thinking about charging interest because the person seems to be borrowing from you too cavalierly, it may be too late to make them take it seriously.
In the situation you describe, if you're concerned about the loans ...
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TL;DR
Knowledge is the only way to dissuade a person. If they don't accept knowledge then there is unfortunately very little you can do besides beg them not to do it.
Unless this is money laundering then there is really no reason that such an establishment would need your money just to give you back 150% at the end of the month.
I'm sorry to hear that her ...
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Lending money between relations is typically a bad idea. This can lead to very awkward dinner conversations and has been known to terminate these precious relationships. In these cases the wisdom is to give or not; but do not lend.
If your friend can afford and is willing to give the money to this parent, then he should do so. However, this situation ...
38
I think you've made a perfectly valid suggestion, and, if your son is struggling somewhat financially now, one that may be very welcome. If you agree to forgive the debt at this time in lieu of a similar amount forgone in future inheritance, it will eliminate the never ending interest-only payments, free up $200+ a month for you son on a tight budget, and ...
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"Ripped off" may be too strong as it implies intent - I'm hopeful it's just bad logic or terminology.
I would say better agreements would be:
You own the condo 100% and borrow the remaining 75% through a private mortgage from them. They get made whole when you sell or refinance the condo.
You keep just a 25% stake but call the $500 "rent" instead of a "...
31
Tell them you will not loan them any more money until their existing debts are paid off. This is closer to how the real world works and it won't come across as vengeful or like your changing your initial "contract".
If they protest, lovingly tell them that your money is not their money, and that an interest free loan from their father is a privilege, not a ...
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Besides the ex-MIL not coming up with the monthly payments, and the ex-wife destroying the car there are other problems.
A lease generally limits you you a specific number of miles over the term of the lease. You may be limited to 1,000 miles a month for a total of 36,000 over the 3 year time of the lease. Your ex-wife could drive all 36K miles in her 24 ...
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I tend to follow the Keep It Simple, Stupid principle.
Next year at the same time when I give my college student daughter some money for a car, I'm going to give her brother an equal amount of money. (I'll suggest that he add it to his own Car Down Payment Fund -- or if he buys a car by then -- apply it to the loan principal, but it'll be a gift and he can ...
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A sign that it is a Ponzi scheme is that the returns are so good that the victim lets it ride. They are encouraged to not pull money from the program. Showing them the cash makes it seem real, but they never need to have as much cash as you would think as long as the number of participants is growing.
To convince somebody you need to be able to explain why ...
25
To expand on what @fishinear and some others are saying:
The only way to look at it is that the parents have invested, because the parents get a % of the property in the end, rather than the original loan amount plus interest. It is investment; it is not a loan of any kind.
One way to understand this is to imagine that after 20 years, the property ...
23
Does your planning include contingencies for
a total loss of the car (Accident)
repo of the car (her not paying)
disappearance of the car (her driving to mexico, one way)
a hit on YOUR credit when she fails to keep her end of the bargain? (Those who ignore the past are destined to repeat it)
you paying for everything (she falls behind on payments, and well.....
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First and foremost: this might be a legal issue, not a financial one. In most locales, support payments like this are part of the formal divorce settlement. Someone needs to locate a copy of that settlement document and read over what the specific terms are for these payments. Those terms will play a big part in what happens next.
If your father's ...
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I think everything in your case is just simply missing one important rule of how credit works.
Essentially, your MIL cannot get a loan. You can. You are making her a large loan that she cannot get for herself. That is all. That is the essence of what this deal is. It is not without interest - she makes a financial contribution toward your son, you get the ...
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What you are positioning as a loan was not a loan at all. Your father bought something to be delivered in the future. Your aunt does not want to deliver it, so she should buy it back at whatever the current market value is.
What is the price that your dad believes her share of the inheritance is currently worth? Is that based on actual appraisals and some ...
answered Oct 26 '17 at 21:46
NL - Apologize to Monica
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Have her invest exactly 1 dollar and allow her to only re-invest any money deriven from that very first dollar.
Within 3 years (which equal 36 months), she will either be a millionaire or she will have lost only that one dollar and learned a valuable lesson.
1 * 1.5 ^ 36 = 2,184,164
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Parents are eminently capable of gifting to their children. If it's a gift call it a gift.
If it's not a gift, it's either a loan or a landmine for some future interpersonal familial interaction (parent-child or sibling-sibling). I an concerned by some phrasing in the OP that it is partially down this path here.
If it's a loan, it should have the full ...
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First, this was never an arrangement for you to build equity, this was an arrangement for them to speculate on another house under the guise of teaching you a life lesson like responsibility or something contrived.
The only way you profit from this is if the value of the house goes up and you sell it. You get 25% of the proceeds, maybe.
If this was an ...
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I hear you (and those answering) use the words "my money" (or "me to pay for stuff") The sooner that ends, the better off you'll both be. My wife and I do have our own checking accounts that we maintain so she can write a check without notifying me, or I can buy her a birthday/mother's day/ etc gift without it showing in the joint account, but nearly all ...
answered Apr 20 '12 at 15:14
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First and foremost, your hesitation is commendable. I think your quality of asking before doing is appreciated. I also think you should approach your siblings the same way.
There are are a few things to consider when evaluating the situation:
Your father left with a debt to be paid to you. In his absence, he left money, so it's reasonable to assume that ...
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If you want to be fair then be fair. It sounds like you wish to gift this money so offer it as a gift.
Hi kids, I have an extra £xyz lying around so I would like to give each of you half.
If this is truly a "no strings attached" gesture then I would like to add that you are a very generous parent.
If this is a dirt-cheap write-off loan you wish to offer ...
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